As the saying goes, “the only thing that is constant in life, is change”. Change will always happen, especially when it is looked at from a specific time-frame reference point.
In 2024, when it comes to Social Security, there are some changes happening and we will look at 3 of the most significant ones. And…..by 2024, we mean as soon as the 1st of January.
1. Wage Limit Beyond Which You Stop Paying Social Security Tax Is Increasing In 2024
Again, as with everything Social Security, there is always a change or difference from one year to the other, sometimes subtle or at other times more pronounced between different groups of people.
If you do not already know, there are folks in our country who would usually start out the year paying Federal, State, Social Security (OASDI) and Medicare taxes like every other wage earner but at a point during the year, may qualify to be exempted from Social Security deductions.
This happens when they have met the wage limit set out for that particular year. For 2023, any amount in wages earned above a cumulative of $160,200 earned during the calendar year is exempt from paying Social Security taxes. For 2024, that wage limit, beyond which Social Security taxes are exempt will be $168,600.
What this means is that for those who earn up to $168,600 and more, they will have to part with about $521 more than they did in 2023. This works out as 6.2% of $8,600.
2. Take A Bigger Check Home – Thanks To Cost-of-Living Adjustment (COLA) Increase
Rapidly rising inflation has done a number on all of us over the last few years and it appears that it is constantly outpacing our overall wage increases. The Cost-of-Living Adjustment (COLA) increase in 2024 will be 3.2%, though lower than the last two years, it is still more than the historical percentage increases.
What this really means for the average Social Security and Supplemental Income (SSI) beneficiary is that their monthly take home pay will increase by a little above $53. According to the Social Security Administration (SSA) this 2024 3.2% increase in COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2022 through the third quarter of 2023.
In addition to this 3.2%, there are other increases in most other aspects of the benefits doled out by the Social Security Administration (SSA). If you want to see more, please take a look at the 2024 COLA Fact Sheet published by the Social Security Administration.
3. Full Retirement Age (FRA) – 67 Years For Those Born After 1960
According to the Social Security Administration, the current Full Retirement Age for those born after 1960 is 67 years. You will become eligible to start earning your monthly benefits from the age of 62 but you would not be entitled to the full payment.
The question often arises, with many individuals wanting to know if it is better to start collecting benefits from age 62 or if you should wait till age 67. While answering this question, I usually state that in my opinion, I think what is best for each individual will depend on their unique situation.
Whereas, it is generally known that the longer you wait before beginning to receive your SSI retirement benefits, the more you will receive. However, because each individual has different financial needs, it is best to understand the monetary implications of whichever choice you choose to go for.
I will encourage you to head over to this SSA page and see more information about Full Retirement Age and its implications as it regards your take home amount.
In conclusion, whereas there are more than three changes coming to the Social Security sphere in 2024, we decided to zoom in on the most significant ones and highlighted those changes. For more information, I will encourage my readers to head over the Benefits Section of the SSA website to gain more information.
